NAMIC testified at a Sept. 25 Office of Insurance Commissioner hearing on a new draft of the Proposed OIC Rule 2011-17, Proposed Regulation on Rate Stability Rules (a/k/a proposed premium capping/rate transition regulation). NAMIC's testimony started off with praise for the OIC's stakeholder-oriented rulemaking process, and NAMIC commended the OIC for amending the proposed regulation to remove an extraordinarily burdensome consumer notification requirement. NAMIC then raised concerns about how the proposed rule is not in the best interest of Washington consumers or insurers that wish to offer consumers an ability to mitigate premium increases via rate stabilization plans that spread-out rate increases over a number of policy terms.

NAMIC's testimony and written comments raised concerns about how the proposed regulation will adversely impact market completion because many insurers will be unable to implement rate stabilization programs due to the excessively restrictive/prescriptive nature of the regulation and the administrative burdens and cost associated with compliance with the proposed rule. NAMIC also asserted that the language of Section 4 of the proposed regulation could arguably be interpreted to create per se strict liability exposure for insurers for de-minimus technical or clerical mistakes in the insurer's rate stability plan, even in cases where the minor error results in a benefit to the policyholder.

The OIC is in the process of reviewing written comments submitted at the hearing and may either amend the proposed regulation or implement the current draft regulation. NAMIC will provide a status report in a future member alert.